Main forms of international joint ventures

Laimonas Marcinkevičius

Abstract


This article analyses the types and forms of the international joint venture, putting special emphasis on two forms of the international joint venture, which are the most popular worldwide. The article consists of three main parts. The first part of the article reviews the variety of forms of the international joint venture in a number of countries. The second part of the article deals with the joint venture without external structure, i.e. with the contractual joint venture, and further, with material terms and conditions of the joint venture agreement. The third part of the article analyses the most complicated form of the international joint venture – the joint enterprise. The related issues, including the key legal aspects, their legal formalizing and peculiarities of the applicable law, have been discussed there.
Although international joint ventures may be classified according to a wide variety of criteria, yet the main types (forms) of the international joint venture in different states are determined by the definition of the joint venture under the laws of a particular state, and even more – in accordance with business practice. For the purposes of the international private law, the most significant criterion for classification of international joint ventures is their form, i.e. existence of external structure (organisation).
The main forms of international joint ventures are contractual joint venture and joint enterprise. The contractual joint venture is only such business cooperation form, which corresponds to the concept of the joint venture (partnership), as defined by the civil law. Otherwise, cooperation of business partners under a contract is considered as mere common activities, and is not a joint venture. A joint venture company and a joint venture partnership are subtypes of the joint venture, and are not independent types of the joint venture. The joint enterprise is a much more complicated form of the international joint venture than the contractual joint venture.
When dealing with the issue of applicable law, it should be noted that the parties of the contractual joint venture are enabled to choose the law applicable to their contract (including the right to apply dépeçage or the partial choice of law). If the applicable law is not chosen in the contract, the applicable law shall be determined according to the rules stating the applicable law in the absence of the choice of law (i. e. the law of the state that has the closest relationship with the obligation is applied). In case of joint enterprise, the critical role in determining the internal and external company’s relationship and related questions is played by the lex societatis. Even though this right might be discussed, the parties may agree on the law applicable to the particular agreement (to apply dépeçage).

Keywords


international law; joint venture; joint enterprise; foreign investment; applicable law; joint-stock company; joint-venture agreement

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"Societal studies" ISSN online 2029-2244 / ISSN print 2029-2236